GM to pay $277 million to settle shareholder lawsuit

Reuters Staff

2 Min Read

(Adds statements from GM regulatory filing,

NEW YORK (Reuters) - General Motors Corp (GM.N) agreed to pay $277 million to settle a shareholder lawsuit contending the automaker made false and misleading statements, according to the company and lawyers for the plaintiffs.

Deloitte & Touche, which was GM’s outside auditor, is contributing an additional $26 million cash payment, bringing the total settlement value to $303 million, law firms Grant & Eisenhofer and Labaton Sucharow said in a statement.

The auto maker disclosed the settlement in a regulatory filing on Thursday. It said the parties reached an agreement in principle last month.

“The settlement is subject to the negotiation of a formal agreement, which will be filed with the court in late August or early September 2008,” GM said.

GM will be required to pay one-half of the money into an escrow account within 30 days of preliminary court approval of the settlement, and the other half into an escrow account in January 2009. The case is being overseen by a federal judge in Michigan.

“GM is pleased with the litigation settlement that has been reached,” GM spokeswoman Renee Rashid-Merem said on Friday.

In the regulatory filing, GM also disclosed the tentative settlement of a separate lawsuit brought by shareholders, agreeing to make unspecified changes to its corporate governance rules. GM also agreed not to oppose plaintiffs’ attorney fees of up to $7.5 million in that case.

Reporting by Martha Graybow and David Bailey, editing by Gerald E. McCormick/Jeffrey Benkoe